Virtual Bank Collapse Causes Real Pain

$750K losses in Second Life prompt calls for federal regulation
By Heather McPherson,  Newser User
Posted Aug 15, 2007 2:19 PM CDT
Virtual Bank Collapse Causes Real Pain
Kevin Alderman manipulates his "Second Life" online avatar Stroker Serpentine on July 12, 2007, at his home-based office in Lutz, Fla. Alderman is involved in a groundbreaking lawsuit to stop others in the popular online world of "Second Life" from copying and selling the code that allows characters...   (Associated Press)

Ginko Financial, an unregulated investment bank that promised returns of up to 60%, collapsed recently, costing its customers 200 million Lindens—the currency of online virtual universe Second Life, where the bank existed. While the bank, managed by a mysterious, anonymous owner, catered only to computer-generated avatars in its 3 1/2 years existence, the money it lost—about $750,000—was very real.

Second Life currently has 20 to 30 banks that offer the same whopping returns and use the same strategy that Ginko did, reports Wired, spurring calls for federal regulation over the cyber community. Linden Lab, the company that runs Second Life, recently asked the FBI to investigate casino activity in the metaverse, which led to a ban on all gambling. (More Second Life stories.)

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